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HQ 559581

March 20, 1997

CLA-2 RR:TC:SM 559581 KBR


Port Director
U.S. Customs Service
200 St. Paul Place
Baltimore, MD 21202

RE: Application for Further Review of Protest No. 1303-94-100275 Concerning the Eligibility of Magnesium for Duty-free Treatment Under the Generalized System of Preferences ("GSP"); Imported Directly; 19 CFR ?10,175(b)

Dear Sir:

This is in reference to the above-cited Application for Further Review of Protest filed by Samuel Shapiro & Company, Inc., on behalf of F& S Alloys and Minerals Corp., contesting the denial of eligibility of magnesium for duty-free treatment under the Generalized System of Preferences ("GSP").


F & S Alloys and Minerals Corp. ("FS") is protesting a denial of eligibility of magnesium for duty-free treatment under the GSP. FS purchased magnesium from Solikamsk Magnesium Works ("SMW"), a producer of magnesium in Russia through SMW's agent Razno Alloys, LTD. The contact for sale of the Russian magnesium stated that the magnesium was to be delivered "FOB Kotka, Finland." In a letter to Customs dated August 9, 1994, and the Entry Summary, the importer indicated that the shipment was shipped through Helsinki, Finland, rather than Kotka, Finland. Two undated letters, one from Razno Alloys Ltd., and one from SMW indicate that the magnesium is of Russian origin and was shipped to "Finland, Loviisa" for further shipment to Baltimore, Maryland. The magnesium was denied duty-free treatment under the GSP and was found to be dutiable at 8 percent ad valorem.

A timely Application for Further Review of Protest was filed on October 28, 1994.


Whether the magnesium from Russia is "imported directly" for purposes of the GSP when it is shipped through an intermediary country to the U.S. as described above.


Under the GSP, eligible articles the growth, product or manufacture of a designated beneficiary developing country (BDC) which are imported directly into the customs territory of the U.S. from a BDC may receive duty-free treatment if the sum of (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. 2463(b)(1). The magnesium is classifiable under subheading 8104.11.0000, Harmonized Tariff Schedule of the United States ("HTSUS"), which at the time of the subject entry was a GSP eligible provision. Also at the time of the subject entry, Russia was a BDC.

The issue in this case concerns whether the magnesium from Russia is considered to be "imported directly" from the BDC. to the U.S., when it is shipped from the BDC through Finland to the U.S. Section 10.175, Customs Regulations (19 CFR 10.175) defines the term "imported directly" for purposes of the GSP. Under 19 CFR 10.175(b), merchandise shipped from a BDC through a non-BDC to the U.S. is "imported directly" if: (1) the merchandise does not enter into the commerce of any other country while en route to the U.S., and the invoices, bills of lading, and other shipping documents show the U.S. as the final destination.

In this instance, the original contract of sale of the magnesium and the amendment thereto, was from SMW to FS, stating the New York address of FS. However, this contract showed as the only delivery location, Kotka, Finland. Since the letters from SMW only states that the magnesium is intended for "further transportation by sea", but does not say to where. The letter from Razno Alloys Ltd., states that the shipment is intended to be shipped from Russia "directly to Finland ... for direct transportation by sea to Baltimore" for FS. This letter is undated and, therefore, it is unclear whether or not it was issued prior to the importation and was part of the import documentation, or issued afterwards for purposes of the protest. Therefore, we find that the record does not contain evidence to establish that the U.S. was the final destination intended from the original sale to the importer from the producer or its agent as required by 19 CFR 10.175(b). Further, there is no evidence that when the magnesium was in the intermediary country that it remained within customs control and that the importation did not enter into the commerce of that country, as required by 19 CFR 10.175(d). Therefore, the magnesium is not considered "imported directly" from a BDC to the U.S.


Based on the information submitted, we find that the magnesium shipped from Russia through Finland before importation into the U.S., does not satisfy the "imported directly" requirement under 19 CFR ?10.175(b) or (d). A copy of this decision should be attached to Customs Form 19, to be sent to the protestant.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065 dated August 4, 1993, Subject: Revised Protest Directive, this decision should be attached to Customs Form 19, Notice of Action, and be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.


John Durant, Director
Tariff Classification Appeals Division

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